Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

22 responses to “Foreclosures Up 4122 YOY Around Seattle”

  1. Sniglet

    Is it normal for the number of foreclosures to fall off in the winter as Tim’s chart shows? I wonder why that would be. I understand how people take homes off the market in the winter but I don’t see how that would impact foreclosures (i.e. home-owners don’t have any choice as to when they occur).

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  2. being patient

    Maybe it has something to when they stop making payments. How long does it take a home to go into foreclosure after someone stops making payments? Maybe around 6 months, that would be a guess.

    Using that it would take 6 months for a home to go into foreclosure then the owners would need to stop making their payments in late fall and early winter.

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  3. Sniglet

    the owners would need to stop making their payments in late fall and early winter

    So owners prefer to stop making their payments in the winter? I didn’t think struggling home-owners were all that concerned about the season in which they decided to default. Then again, maybe it’s more pleasant to deal with moving when the weather is nice…

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  4. deejayoh

    I’d suspect it is some sort of data glitch from foreclosure.com. Their data is not really intended to be used in this way. Put in the “Interesting, but not bulletproof” analysis file

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  5. Joel

    Why give up during the spring/summer when you still have (or think you still have) a good chance of selling? That’s why more people give up during the winter.

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  6. irrationalexuberance

    I like this blog……..its reality not consumerism spin. Bottom line 70% of Americans have no real plan for retirement and you tell the average person that they flip out and call you pessimistic…….I have been going to battle with real estate agents for months and I laugh…..there is a reason why there job announcements say no experience required or education

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  7. Jackson Wallace

    I would like to see prices fall as much as anyone, but in the best areas, the best houses at the best prices are NOT sitting. Maybe out in in the burbs and the lower-grade areas, and the properties that are lipsticked pigs are falling in value and sitting, but stuff is still moving in the best areas.

    Of course, Seattle is paradise in the summer, and thats why the best deals are desperate sellers in the winter. I’m still not seeing evidence that we are going to eat it anywhere near as hard as FL, NV, and CA. By the way, I looked up Mission Beach area and found one deal, La Jolla nothing, and Huntington Beach is still all 700k plus, so this RE collapse seems to be at the low end, and the very high end,
    You can buy in Chula Vista and Tacoma, but so what? The best in Tacoma is still pricey.
    Shoreline, WA is still 50% above where it was in 2002. I dont think of it as central top-tier, but many people like it, and there were lots of decent, but old houses for 200k in 1999-2002 that are now 300, maybe even 400k. It is not declining back to old levels, at least not yet.

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  8. Joel

    They do have a real plan. A real estate plan. Har.

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  9. vboring

    so how does this foreclosure history compare to those of big bubbly areas?

    on a per capita (or per 1000 household or whatever) basis do we have more or less foreclosures than San Diego did 12 months after prices peaked (or however many months it has been)?

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  10. vboring

    foreclosures are probably the most important mechanism for driving prices down. they transfer the assets to parties that have no attachment to or use for them. these parties then try to liquidate the assets – at steeply discounted prices that the former “owners” would never accept.

    if there were no foreclosures, we’d probably follow the Japanese model of stagnant prices for decades instead of crashing prices for a few years.

    seeing large numbers of foreclosures means rapid price declines are coming.

    so, just how large are our foreclosure numbers?

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  11. Garth

    The big bubbly areas started to go really bad (prices decline) at about 1 in 300 (which I think is historically a pretty low number) and collapsed in the worst areas to half or a quarter of that. Previously 1 in 1000 was the time to start watching things more.

    1200-1500 is about where they should be during a good period with the 1 in 2400-4000 we have been dealing with for a few years is just silly and a function of availability of credit and appreciation

    The areas with the biggest hits had the most “master planned communities” and are pretty hard to compare well against the puget sound area. People I have talked to with access to paid regional data are looking at rent and foreclosure data for Tacoma to try and predict the greater puget sound market (Tacoma is / was at about 1 in 300 during part of the quarter and the zillow chart seems to show that area dropping about 10% in the same quarter)

    That crispy commenter posted a link to a Marcus Milichap report for Phoenix to try and illistrate where rents are headed here, they have free reports available and have a very bullish report out for the next year for property managers in the seattle area looking for another 6-10% in rent increases.

    http://www.marcusmillichap.com/

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  12. Buceri

    Tampa, FL (hit terribly by scams, bubble and now foreclosures) –

    A unit in my neighborhood just sold for 2002 price. Just a comment. I am in the same pool like most that believe we won’t see anything close to FL, CA, AZ, NV numbers in WA. At least not because of speculation. If it happens, it will be because of economical collapse.

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  13. Captain Kirkland

    @12….Marcus Millichap underestimating the depth of our current economic crisis. Rents will go down because demand for commercial space is going down. And as commercial properties are valued based on rents (cap rates), the value of the buildings will go down exponentially. To bad for some of the big rich idiots.

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  14. softwarengineer

    I’M LOOKING AT A VACANT HUD HOME FROM MY WINDOW [HOTEL?...LOL] RIGHT NOW

    Its been on the market three times since 1999 and was vacant for over a year in 2004-2005, its vacant again, its been a year and evidently, the bank won’t lower the price enough to get it to sell.

    I have a question to you bubble brains, why are foreclosed homes different than repossessed? In logic, both are abandonned with no mortgage payment. How many “foreclosed” homes become vacant rat traps and suddenly of the foreclosure statistics?

    Is it like the unemployment statistics; it ignores “giveups”?

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  15. mukoh

    We never had the amount of speculation here that there was in areas of NV,FL. Majority of the one unit wonder speculators have been gone for a while and are now on the block because they could never hold on.

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  16. TJ_98370

    One Third of New Owners Owe More Than House Is Worth (Update1)
    .
    Aug. 12 (Bloomberg) — Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations……
    .
    ……Negative equity and declining prices are making it difficult for homeowners to sell property for a profit. Almost one-quarter of U.S. homes sold in the past year were for a loss, Zillow said. That contributes to the foreclosure rate because some homeowners can’t absorb the loss and end up surrendering their homes to the bank that holds the mortgage, said Stan Humphries, Zillow’s vice president of data and analytics…..

    .

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  17. rose-colored-coolaid

    So owners prefer to stop making their payments in the winter? I didn’t think struggling home-owners were all that concerned about the season in which they decided to default. Then again, maybe it’s more pleasant to deal with moving when the weather is nice…

    Actually, I bet they do. You’ve got Christmas shopping to get done and you overspend. Now you can’t pay your mortgage. I would not be shocked if the two correlated.

    Foreclosures have been consistently increasing by huge margins for the last year or so. Up until now, the response was always “But they are still so low”. I think foreclosures have now reached an equilibrium of sorts and that if we continue to see such a rapid increase it will be felt quite strongly.

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  18. Dave

    Whether or not we experienced “speculation” depends on how you define the word. As far as I’m concerned, purchasing a home where you use 100% financing (actually more than that as the closing costs were frequently added into the purchase price) is classic speculative activity. The buyers were banking on increasing appreciation to make the math work. To say that it did not reach the level of some of the other areas is not to say that it was not excessive here.

    Home prices are falling, foreclosures are rising, and the economy is deteriorating as we speak. This is not a recipe for a housing bottom. Prices will continue to decline because no one can secure financing without cash and a good job. All these current foreclosures will be entering the expanding inventory pool around the first of the year. Unemployment is climbing and will be moving higher in the months ahead.

    All of the speculative activity around here is in the process of unwinding, and the end result won’t be pretty.

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  19. Joel

    If your home buying plan is dependent on appreciation then you are a speculator. Even if you plan on living in the house for a decade, if the only way you can stay in your house is by refinancing at a lower rate after it appreciates then you are speculating.

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  20. Jillayne Schlicke

    Hi software engineer,

    a foreclosed home “is” a reposessed home. HUD may refer to their foreclosures as HUD Repos. Banks may refer to their foreclosed homes as REOS (real estate owned.)

    First the homeowner becomes delinquent on their mortgage.

    A set period of time passes (depending on state law)

    Then a Notice of Trustee Sale is filed.

    Then another set period of time goes by (depending on state law).

    If the owner does not bring the loan current, the bank then auctions off the home to the highest bidder at the Trustee Sale, which takes place on the couthouse steps. If there are no bidders, the home is deeded back to the bank. NOW the bank “owns” the real property and then it becomes an REO, or a REPO. If the loan was insured by FHA, FHA has the option of paying the insurance claim to the bank or taking on the home itself and then instead of a bank REO it becomes a HUD REO (or HUD repo.)

    Hope that helps :)

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  21. BanteringBear

    mukoh posted:

    “We never had the amount of speculation here that there was in areas of NV,FL. Majority of the one unit wonder speculators have been gone for a while and are now on the block because they could never hold on.”

    Really? Where did you get your data? Could you please share it so we can all see? Or, is this just wishful thinking on your part?

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